![Photo Image](https://img.etnews.com/news/article/2023/01/09/cms_temp_article_09174335780524.jpg)
The global economic recession hit the electronics industry hard. Samsung Electronics and LG Electronics' fourth quarter operating profit plunged 69% and 90%, respectively. It just doesn't stop there. The performance of semiconductors, smartphones, and home appliances, which represents these companies, is not expected to rebound easily in the first half.
According to FnGuide, a financial information company, Samsung Electronics' expected performance for the first quarter of this year is 70.276 trillion KRW in sales and 5.6029 trillion KRW in operating profit. LG Electronics is expected to make sales of 21.3584 trillion KRW and operating profit of 1.0459 trillion KRW. The numbers of Samsung Electronics is expected to decrease, their sales by about 7 trillion KRW and operating profit by more than 8 trillion KRW compared to the first quarter of last year. It is analyzed that LG Electronics will maintain a similar level of sales, but their operating profit will decrease by more than 800 billion KRW. Considering that the provisional 4Q results were lower than market expectations, the possibility that the actual 1Q results can also be lower than expected.
![Photo Image](https://img.etnews.com/news/article/2023/01/09/cms_temp_article_09174413225997.jpg)
The biggest problem is that the global economy shows no sign of a rebound. As the war between Russia and Ukraine prolongs, the burden of rising raw material prices, such as rising logistics costs, remains. As major countries continue to pursue high interest rate policies amid inflation, purchasing sentiment is also shrinking. Traditionally, the first quarter has been recognized as a booming season for smartphones and home appliances due to the launch of new products, but this year, it is difficult to expect good sale as consumers will not open their wallets.
At CES, LG Electronics President Joo-wan Cho said regarding this performance, “As the global economic recession and supply chain instability have been prolonged, the uncertainty surrounding the business environment has become a constant rather than a variable. Existing businesses will break through their limits by changing business models and methods, and new businesses will be pursued by concentrating internal and external capabilities through selection and concentration.”
Industry and experts are predicting that market demand will rebound in the second half of the year.
Myeong-seop Song, an analyst from HI INVESTMENT & SECURITIES, said, “The semiconductor industry will remain weak until the end of the second quarter and the beginning of the third quarter until excess inventory normalizes. Customer inventory restocking will begin after the third quarter, demand will recover in the fourth quarter, and semiconductor prices will finally recover.
Jong-hee Han, vice chairman of the DX division at Samsung Electronics, said, “Although the business environment is not good this year, I think the economy will improve a little in the second half of the year.”
Hyun-woo Doh, an analyst from NH Investment & Securities, said, “Samsung Electronics is also expected to record losses in the semiconductor sector this year and reduce investment. Through this, it will be possible to improve the performance of memory semiconductor companies from the second half.”
However, as the automobile market shows signs of growth, solid demand is expected in the fields of automotive semiconductors, electronic components, and automotive displays. An industry insider said, “For home appliances, we need to focus on securing profitability through strengthening premium-oriented product lineups, while maintaining a healthy level of inventory management and efficient resource management.”
By Staff Reporters Dong-jun Kwon (djkwon@etnews.com) Da-eun Jung (dandan@etnews.com)